Thinking about buying a home? It’s going to be an expensive undertaking.
House prices continue to rise in Waterloo Region, at rates similar to the Greater Toronto Area. According to the Kitchener-Waterloo Association of Realtors, there were 474 homes sold through their MLS listings in KW in February, up from the 10-year average of 405 for that month. However, supply is much lower than it was last year. At the end of February of this year there were 427 units on the market, compared to 1,226 in February 2016.
That decreased supply, plus population growth and a strong economy, helped push prices way up.
“Detached homes sold for an average price of $549,691, an increase of 30.7 per cent, while the average sale price for an apartment style condominium was $246,736, an increase of 8.8 per cent,” according to a KWAR news release. “Townhomes and semis sold for an average of $388,721 (up 20.6 per cent) and $369,624 (up 31 per cent) respectively.”
For now, low interest rates help. Michael Hewitson is a sales representative at Royal LePage Wolle Realty, and has worked in the industry for seven years. He hasn’t noticed a substantial decrease in the number of first-time buyers — yet. But a lot of them have had to adjust their expectations.
“Under the current market conditions, many first-time buyers are finding that their money won’t go as far as it did even just a few months ago,” says Hewitson. “Some buyers are reducing their expectations — size, condition, location — while others are spending more than they had initially planned to get what they want.”
There’s been a substantial increase in the number of buyers coming from the GTA. “The Region of Waterloo offers buyers from the Toronto area a nice home, with some property and it is still only a short drive to Toronto,” says Hewitson. “What we are also finding is as tech companies continue to grow in Waterloo, the demand for housing from those moving for jobs is increasing.”
That increased competition for fewer units also makes it more challenging for people who are already in the market. Lisa, a KW resident who asked The Community Edition not to use her real name, has a small bungalow where she lives with her husband and two kids under age five. Their current space no longer meets their needs.
“We are looking for something that gives our kids some extra space to run around and play,” she says. “We want a place that is in need of updating so that we can renovate it to our taste.”
Lisa, who’s been looking for a new home since the spring of 2016, says the process is “disheartening and frustrating.”
Having to bid over asking price is nerve-racking.
“We [recently] put in another offer on another property — $70,000 over asking with no conditions, [which is] scary! And we were still not successful,” she says. “Despite the frustrations we are still looking. We know that we need to be patient. Hoping that the spring market will offer more inventory.”
Hewitson has some advice, especially for first-time buyers.
“The key is to be realistic within the market conditions. Prices are increasing and it is currently a strong sellers’ market. The buyer needs to be ready to act quickly and often with no conditions, which can be scary for any buyer, but especially for a first-time buyer. It is important to know what they want, understand what it will cost and determine a strategy with their realtor to get the home they want.”
Next month: What can be done to cool an over-heating housing market without causing it to crash?